Iran Nuclear Deal

Over the past months, I have focused attention on two core issues: The Greek debt crisis, which has dogged the European Union for years, and the Nuclear Deal with Iran, which has polarized politics in the United States.  

Both the Greek debt issue and the Nuclear Deal with Iran are now going to go through, notwithstanding domestic opposition in Germany to the Greek bailout and domestic opposition in the United States where Republicans are threatening a life and death issue for America.  

To my mind, the Greek debt issue will not go away and will continue to be a thorn in the European Union's side.  The IMF has made no bones about the fact that Greek debt is not sustainable, and thus this issue will still need more resolution.  What is more positive, however, is the reaction we should see to the Iranian Nuclear Deal.  This deal could  really overshadow Nixon's visit to China as it has such immense implications, both in the commercial world and diplomatically.  There is much to think about now, and the Middle East is fast becoming a very interesting ground for further study. 

One Minute to Midnight: Greece is Turning in the Wind

To my mind, Greece hit its 11th hour some time ago.  In fact I first started to make inquiries about Greek debt and posted on this subject in February 2013. I believe that the financial dilemma that developed in Greece epitomizes the failure of the European Union's mandarins to recognize that political solutions and political institutions are always necessary to run civil society.  Relying on an incorrect economic model through the ECB to correct fiscal imbalances is near to impossible, and the past two years have certainly proved this notion correct. Now that Greece is on the very edge, opinion makers are taking time out of their own schedules to pass comment.  Joseph Stiglitz, who is always worth a read, now has his say, and he certainly makes a strong argument below. 

Joseph Stiglitz: how I would vote in the Greek referendum 

The rising crescendo of bickering and acrimony within Europe might seem to outsiders to be the inevitable result of the bitter endgame playing out between Greece and its creditors. In fact, European leaders are finally beginning to reveal the true nature of the ongoing debt dispute, and the answer is not pleasant: it is about power and democracy much more than money and economics.

 Of course, the economics behind the programme that the “troika” (the European Commission, the European Central Bank, and the International Monetary Fund) foisted on Greece five years ago has been abysmal, resulting in a 25% decline in the country’s GDP. I can think of no depression, ever, that has been so deliberate and had such catastrophic consequences: Greece’s rate of youth unemployment, for example, now exceeds 60%.

 It is startling that the troika has refused to accept responsibility for any of this or admit how bad its forecasts and models have been. But what is even more surprising is that Europe’s leaders have not even learned. The troika is still demanding that Greece achieve a primary budget surplus (excluding interest payments) of 3.5% of GDP by 2018.

 Economists around the world have condemned that target as punitive, because aiming for it will inevitably result in a deeper downturn. Indeed, even if Greece’s debt is restructured beyond anything imaginable, the country will remain in depression if voters there commit to the troika’s target in the snap referendum to be held this weekend.

 In terms of transforming a large primary deficit into a surplus, few countries have accomplished anything like what the Greeks have achieved in the last five years. And, though the cost in terms of human suffering has been extremely high, the Greek government’s recent proposals went a long way toward meeting its creditors’ demands.

 We should be clear: almost none of the huge amount of money loaned to Greece has actually gone there. It has gone to pay out private-sector creditors – including German and French banks. Greece has gotten but a pittance, but it has paid a high price to preserve these countries’ banking systems. The IMF and the other “official” creditors do not need the money that is being demanded. Under a business-as-usual scenario, the money received would most likely just be lent out again to Greece.

 But, again, it’s not about the money. It’s about using “deadlines” to force Greece to knuckle under, and to accept the unacceptable – not only austerity measures, but other regressive and punitive policies.

 But why would Europe do this? Why are European Union leaders resisting the referendum and refusing even to extend by a few days the June 30 deadline for Greece’s next payment to the IMF? Isn’t Europe all about democracy?

 In January, Greece’s citizens voted for a government committed to ending austerity. If the government were simply fulfilling its campaign promises, it would already have rejected the proposal. But it wanted to give Greeks a chance to weigh in on this issue, so critical for their country’s future wellbeing.

 That concern for popular legitimacy is incompatible with the politics of the eurozone, which was never a very democratic project. Most of its members’ governments did not seek their people’s approval to turn over their monetary sovereignty to the ECB. When Sweden’s did, Swedes said no. They understood that unemployment would rise if the country’s monetary policy were set by a central bank that focused single-mindedly on inflation (and also that there would be insufficient attention to financial stability). The economy would suffer, because the economic model underlying the eurozone was predicated on power relationships that disadvantaged workers.

 And, sure enough, what we are seeing now, 16 years after the eurozone institutionalised those relationships, is the antithesis of democracy: many European leaders want to see the end of prime minister Alexis Tsipras’ leftist government. After all, it is extremely inconvenient to have in Greece a government that is so opposed to the types of policies that have done so much to increase inequality in so many advanced countries, and that is so committed to curbing the unbridled power of wealth. They seem to believe that they can eventually bring down the Greek government by bullying it into accepting an agreement that contravenes its mandate.

 It is hard to advise Greeks how to vote on 5 July. Neither alternative – approval or rejection of the troika’s terms – will be easy, and both carry huge risks. A yes vote would mean depression almost without end. Perhaps a depleted country – one that has sold off all of its assets, and whose bright young people have emigrated – might finally get debt forgiveness; perhaps, having shrivelled into a middle-income economy, Greece might finally be able to get assistance from the World Bank. All of this might happen in the next decade, or perhaps in the decade after that.

 By contrast, a no vote would at least open the possibility that Greece, with its strong democratic tradition, might grasp its destiny in its own hands. Greeks might gain the opportunity to shape a future that, though perhaps not as prosperous as the past, is far more hopeful than the unconscionable torture of the present.

 I know how I would vote.

GREXIT: The Writing Appears to be on the Wall

There is no doubt that a Greek tragedy of modern proportions is upon us.  Regardless of the outcome, the blatant failure of Europe’s institutions and the mandarins’ continuing philosophy of austerity, epitomize the obstinacy and lack of vision that pervades the European Union today.  My thoughts have been enriched through correspondence from Jack Flattery, an economist in the United States, and a graduate student of mine, Tristan von Zahn.  Both agree that the sclerosis within the corridors of the European Union will prove its undoing.  Habermas prosaically refers to this sclerosis, particularly within the German leadership, as ‘the scandal of constipation’.  When will enough be enough to create a tipping point away from the madness?

 Why Angela Merkel Is Wrong On Greece

by  Jürgen Habermas

The latest judgment of the European Court of Justice (ECJ) casts a harsh light on the flawed construction of a  currency union without a political union. In the summer of 2012 all citizens owed Mario Draghi a debt of gratitude for uttering a single sentence that saved them from the disastrous consequences of the threat of an immediate collapse of their currency.

By announcing the purchase if need be of unlimited amounts of government bonds, he pulled the chestnuts out of the fire for the Eurogroup. He had to press ahead alone because the heads of government were incapable of acting in the common European interest; they remained locked into their respective national interests and frozen in a state of shock. Financial markets reacted then with relief over a single sentence with which the head of the European Central Bank simulated a fiscal sovereignty he did not possess. It is still the central banks of the member states, as before, which act as the lender of last resort.

The ECJ has not ruled out this competence as contrary to the letter of the European Treaties; but as a   consequence of its judgment the ECB can in fact, subject to a few restrictions, occupy the room for manoeuvre of just such a lender of last resort. The court signed off on a rescue action that was not entirely constitutional and the German federal constitutional court will probably follow that judgment with some additional precisions. One is tempted to say that the law of the European Treaties must not be directly bent by its protectors but it can be tweaked even so in order to iron out, on a case by case basis, the unfortunate consequences of that flawed construction of the European Monetary Union (EMU). That flaw – as lawyers, political scientists and economists have proven again and again over the years – can only be rectified by a reform of the institutions.

The case that is passed to and from between Karlsruhe and Luxembourg shines a light on a gap in the construction of the currency union which the ECB has filled by means of emergency relief. But the lack of fiscal sovereignty is just one of the many weak spots. This  currency union will remain unstable as long as it is not enhanced by a banking, fiscal and economic union. But that means expanding the EMU into a Political Union if we want to avoid even strengthening the present technocratic character of the EU and overtly writing off democracy as merely decorative.

Those dramatic events of 2012 explain why Mario Draghi is swimming against the sluggish tide of a short-sighted, nay panic-stricken policy mix. With the change of government in Greece he immediately piped up: “We need a quantum leap in institutional convergence…. We must put to one side a rules-based system for national economic policy and instead hand over more sovereignty to common institutions.” Even if it’s not what one expects a former Goldman Sachs banker to say, he even wanted to couple these overdue reforms with “more democratic accountability” (Süddeutsche Zeitung, March 17, 2015).

These were the words of someone who had learned that the wrangling behind closed doors among heads of government only thinking of their national voter base is simply not good enough if one wants to achieve the necessary fiscal, economic and social policy decisions. Today, three months later, the ECB is yet again at work buying time for incapable governments with emergency lending.

The Greek election result is a vote against humiliating misery

Because the federal German Chancellor opted as early as May 2010 to treat investor interests as more important than a haircut in restoring the Greek economy to health, we’re stuck in a crisis once more. This time it’s the hole left by another institutional deficit that emerges.

The Greek election result is the vote of a nation that, with a significant majority, is standing up against the humiliating as well as oppressive misery of an austerity policy imposed upon their country. There can be no argument about the vote itself: The population rejects the continuation of a policy whose drastic failure is something they have experienced at first hand. Equipped with this democratic legitimacy, the Greek government is trying to bring about a change of policy in the Eurozone.

This brings them in Brussels right up against the representatives of 18 other governments which justify their rejection by coolly pointing to their own democratic mandate. You’ll recall those first meetings when the arrogantly swaggering novices basking in the upbeat mood of their triumph joined in grotesque battle with the incumbent rulers acting partly like paternalistic uncles and partly like sneering old hands: Both sides insisted parrot-like that they enjoyed the authority given by their respective “people.”

The unintentionally comic nature of their uniformly nation-state way of thinking brought what is lacking unmistakably to the attention of European public opinion: a focus for a common decision-making process among citizens across national borders about weighty courses of political action in the core of Europe.

But the veil cast over this institutional deficit of an empowered European Parliament based on a European-wide system of political parties has not yet been really shredded. The Greek election has thrown a spanner in the works of Brussels because here the citizens have themselves chosen a European political alternative for which they are geared up. Elsewhere, government representatives make such decisions as technocrats among themselves and spare public opinion in their countries from upsetting issues. The compromise negotiations in Brussels really get bogged down because both sides don’t ascribe blame for the barren nature of their discussions on the flawed construction of the proceedings and institutions of the EMU but on the bad behaviour of their partner.

It’s certainly the case that we’re dealing here with the stubborn sticking to a policy of an austerity programme that not only runs into overwhelming criticism from international experts but has caused barbaric costs in Greece and has demonstrably failed here. But, in the basic conflict opposing one side looking for a change of policy to the other obstinately refusing to engage at all in political negotiations, a deeper asymmetry is exposed.

Let’s be quite clear about the disgusting, nay scandalous aspect of this rejection: A compromise collapses not because of a few billion here or there, not even because of this or that condition, but solely because of the Greek demand to allow a new start for the economy and a population exploited by a corrupt elite by agreeing debt forgiveness – or an equivalent regulation, e.g. a debt moratorium tied to growth.

Instead, the creditors insist upon the acknowledgment of a debt mountain that the Greek economy will never be able to overcome. Mind you, it goes without saying that a haircut is unavoidable sooner or later. So the creditors insist with bad faith on the formal recognition of a debt burden they know is intolerable. Until recently, they even persisted with the literally fantastic demand for a primary surplus of more than 4%. This has been cut to a still unrealistic demand for 1%; but, so far, an agreement upon which the fate of the European Union depends has failed because of the demand from the creditors to stick to a fiction.

The weak performance of the Greek government

Of course, the ‘donor countries’ can see political reasons for holding onto this fiction which allow an unpleasant decision to be put off in the short term. They fear, for instance, a domino effect in other ‘recipient countries'; and Angela Merkel cannot be sure of her own majority in the Bundestag. But any wrong policy must one way or the other be revised in the light of its counterproductive consequences. On the other hand, you can’t pin the blame for the impasse on just one side.

I cannot judge if there’s a well-thought-out strategy behind the tactical steps taken by the Greek government and what is down to political necessities, to inexperience or the incompetence of the main players. I don’t have enough knowledge about the widespread practices and societal structures standing in the way of potential reforms either. But it’s obvious that the House of Wittelsbach has failed to construct a functioning state.

However that may be, such difficult circumstances don’t explain why the Greek government itself is making it hard for its supporters to make out any consistent line behind its erratic behaviour. There’s no sensible effort evident for building coalitions; one doesn’t know whether the leftist nationalists are not clinging to a somewhat ethno-centric sense of solidarity and are only pursuing continued membership of the Eurozone for narrow prudential reasons – or if their views do go beyond the nation state.

The demand for a haircut as the basso continuo of their negotiations is, either way, insufficient to arouse confidence on the opposite side that the new government is different – that it will act more energetically and responsibly than the clientilist governments that it replaced. Tsipras and Syriza might have drawn up the reform programme of a left-wing government and thus ‘showcase’ it to their negotiating partners in Brussels and Berlin. Amartya Sen last month in Firle, East Sussex, compared the austerity policy pushed through by the federal German government with a medicine that contains a toxic mixture of antibiotics and rat poison.

In complete accordance with the Nobel Prize-winner for economics, the left-wing government might have taken on a Keynesian segregation of the Merkel medicine and consequentially thrown out all neoliberal impositions; but, at the same time, they would have had to give credibility to their intentions of carrying through the overdue modernisation of state and economy, execute a fairer form of cross subsidies, combat corruption and tax evasion etc. Instead, it resorted to moralising – to a blame game that worked to the advantage of the German government in the given circumstances, enabling it to dismiss with neo-German robustness the wholly justified complaint of Greece about the clever way a line was drawn (under debts) in the two-plus-four negotiations (of 1990 over German unification).

The weak performance of the Greek government doesn’t alter the fact of a scandal that consists in politicians in Brussels and Berlin refusing to meet their colleagues from Athens as politicians. They indeed do look like politicians but (until last Monday) only spoke in their economic role as creditors. This transformation into zombies is intended to give the protracted insolvency of a state the appearance of a non-political, civil court proceeding.

That makes it all the easier to deny any political co-responsibility. Our press is making fun about the act of renaming the Troika; it is indeed like a magic trick. But, with it, there comes the legitimate wish to see emerge the true face of the politician behind the mask of the creditor. For only as politicians can these people be held responsible for a fiasco that has played out in massively ruined life-chances, in joblessness, sickness, social misery and hopelessness.

The scandal within the scandal is constipation

Angela Merkel brought in the IMF from the outset for her dubious rescue moves. This body is responsible for dysfunctions in the international financial system; as therapist it takes care of its stability and thus acts in the common interest of investors, especially of institutional investors. As Troika members, European institutions also coalesce with this player so that politicians, in so far as acting in this function, can retreat into the role of untouchable agents acting strictly according to the rules of the IMF. This dissipation of politics into market conformity helps to explain the chutzpah with which representatives of the federal German government, all of them highly moral people, can deny their political co-responsibility for the disastrous social consequences that they nevertheless took on board as opinion leaders of the European Council through the implementation of the neoliberal austerity programmes.

The scandal within the scandal is the constipated manner in which the German government perceives its leadership role. Germany is indebted for the stimulus behind the economic recovery from which it still benefits today to the wisdom of the creditor nations which, in the London Agreement of 1953, wrote off around half of its debts.

But this is not about moral embarrassment but about the political core of the matter: The political elites in Europe should no longer hide from their voters and themselves dodge the alternatives posed to us by an politically incomplete currency union. It’s the citizens, not the banks, which must retain the final say in existential questions for Europe.

As regards the post-democratic lulling to sleep of public opinion, the switching of the press into a therapeutic type of journalism is a contributory factor – as it marches arm in arm with the political class in caring for the wellbeing of customers, not citizens.

The Euro, Grexit, and yet more wringing of hands

I have long advocated that the Euro should become a parallel currency and not a substitute currency in the various states in Europe.  I have also argued long and hard for a confederation of states in Europe and not a headlong rush toward a Federated Europe, a plan so beloved of the mandarins in Europe.  Opinion pieces as set out below were simply unheard of a while back, but now are becoming more prevalent and I am now interested to understand when we shall see a tipping point away from the current consensus over the EU.  My thoughts are that the negotiations that are gathering momentum as Great Britain sets up its new relationship with the EU could be the catalyst for the tipping point, but it’s still too early to make a definitive prediction.

The Euro Taboo:  The single currency, the beloved offspring of European elites, is largely immune to criticism.

By HANS-OLAF HENKEL 4/6/15, 12:22 PM CET Updated 4/6/15, 4:40 PM CET

The eurozone crisis that has crippled the Continent for the better part of a decade now has all the makings of a Wagnerian opera, in which one tragedy chases the next. The longevity of the crisis and the prevailing denial about its origins among European elites has helped escalate the situation to the magnitude of the Great Depression of the 1930s.

The political consequences of the European Monetary Union’s crucifixion of Southern Europe are now plain: its policies have undermined the achievements of post-war European integration, given new life to radical populist parties, and fueled a surge of anti-NATO sentiment. The prolonging crisis can only increase the ranks of friends of Russian imperialism in Western Europe.

The euro has long been too weak for Germany and too strong for Southern Europe, including France. Instead of facilitating the convergence of European economies, the European Monetary Union (EMU) has only widened the competitiveness gap between member states. In its attempt to restore the competitiveness of Southern Europe’s export industries, trapped in an overvalued currency, the Troika introduced a policy of internal devaluation – also known as competitive austerity – after the 2008 crisis, aimed at wages cuts. The predictable result was mass unemployment and a sharp drop in industrial output, a man-made economic disaster caused by a blind commitment to saving the euro.

And yet, the mainstream European narrative refuses to draw the line between the euro and the collapse of the Greek economy. Instead, the refrain in Brussels highlights the “lack of structural reform,” which cannot by itself explain the scale of Greece’s woes.

Southern European economies desperately need deep currency devaluation, the single most powerful adjustment instrument to cope with serious economic crisis, but that must to be combined with sound economic policy. So long as those countries remain members of the EMU, devaluation is not an option.

The single currency, the beloved offspring of European elites, is largely immune to criticism. It has become taboo to articulate the obvious link between the euro and the economic crisis. Interestingly, this taboo does not exist in the United States, where observers on the right and left, such as Martin Feldstein and Paul Krugman, make this point.

As a result, centrist critics of the euro are being lumped together with right-wing populists such as Marine Le Pen and Nigel Farage. This betrays a sharp disconnect from reality in the mainstream European media.

The natural home for pro-market centrists, people who understand the folly of the euro, is in the European center-right, with its faith in economic liberty and limited government, commitment to the transatlantic partnership, embrace of globalization, and positive vision of a less bureaucratic EU guided by the principle of subsidiarity.

The inability of the European establishment to differentiate between politicians who want a reformed EU, free markets, and no euro, from populists who see nothing of value in the EU, is a symptom of the unhealthy public debate surrounding the euro. Linking the downfall of the EU to the controlled dismantling of the euro takes Europe’s only realistic way of producing conditions for growth off the table.

European leaders insist on continuing to punish Greece with crushing austerity, which pushes the country that invented democracy into the arms of autocratic Kremlin. The dogmatic defense of the euro at all costs endangers the Common Market and stirs more anti-American and anti-NATO feelings than even the most creative Soviet propagandist could have imagined.

The conventional wisdom that fiscal union could fix the eurozone must be rejected. The lessons from Italian history demonstrate that fiscal transfers are unable to help regions suffering from an overvalued currency. Likewise, the European Central Bank’s quantitative easing cannot put an end to the misery in Europe, as it cannot address the problem of misaligned exchange rates within the EMU and its internal imbalances, and instead fuels asset bubbles setting up for a new financial crisis.

Greece needs deep devaluation and a debt write-off. The best economic scenario for a break up of the euro would be the controlled exit of Germany and other competitive countries, but in the absence of political will in Berlin and in other capitals for that scenario, a negotiated Greek exit should be agreed upon.

Only with bipartisan cooperation between centrist European political forces with the political imagination to conceive of an EU without a monetary union, at least in its current form, can we pave the road toward a real European recovery.

Hans-Olaf Henkel is a former CEO of IBM Europe, a former head of the German Federation of Industries (BDI).  He is a member of the European Parliament (AfD) and the Vice-Chair of the European Conservatives and Reformists Group.

POL 1004 Revision Additional Comments

As we are approaching the final hurdle before the exam on Tuesday, I write for a few reasons.  First I would like to thank you for your generous and kind comments on your evaluations.   Second, I want to urge you all to put in that little bit of extra effort to ensure you will do well on the exam.  And third, I would like to provide you with a light interlude from your studies with a youtube link.  Had Plato been alive today, perhaps this would have been his world of illusion.   I am already looking forward to seeing you next year in POL 2039, so please make sure you pass this exam with aplomb!

https://www.youtube.com/watch?v=JDo9F8tFbeM&feature=youtu.be

POL 1004 REVISION

As this is the last lecture that I shall deliver to POL 1004, I have decided to break my own rules and post my class notes for this lecture on my blog.  Before proceeding, however, I would like to thank you all for your commitment to this class and the enthusiasm that you have shown over the semester.  It has certainly been a joy to teach you and I shall miss teaching POL 1004 in the future. 

Having said this, as I have been reassigned, I shall now look forward to seeing you again in POL 2039, (International Political Economy), a second-year course that I shall now teach in the first semester of 2016 together with Dr Lauren Paremoer. 

POL 1004 REVISION

We must understand the structure or underlying premises that underpinned the first quarter of POL 1004

1).  Comparative method

2). Theories from political theorists

Thus the core themes that we should know are:

1).  Power; Authority; and legitimacy

2).  Elites

3). Political development and modernization

How do we link these concepts through political theory?

Look for comparison:

First Stream

Plato; Locke; Weber; Huntington

Second Stream

Hobbes; Machiavelli

Third Stream

Rousseau and Marx:  Skokpol , Gurr and Davies

Lets start with Plato:  Key is the notion of the good.  Illusions can be dangerous as they can lead to the destruction of society.

Locke:  Crisis of Legitimacy: King exceeded the scope of his authority:  There is a social contract between rulers and ruled.  The government rules by the consent of the governed. 

We introduce Weber through Kenneth Boulding who argues that a state exercises power in a variety of ways:

1). Force                                 (coercion)

2). Exchange                          (Locke’s productive exchange)

3). Creating obligations        (KISS:  Inspire loyalty in the citizens)

Weber sees authority as a means of validating power

Looks to:

1)   Traditional authority

2)   Charismatic authority

3)   Legal rationalism

Weber argues that legitimacy is the key to political stability and is nothing less than the source of a regime’s survival and success.

Thus we can link Weber to the problem of obligation or why citizens feel obliged to acknowledge the authority of government.

Huntington builds on Weber

He looks at the problem of change through the lenses of political development.  He argues that political development can be defined as political modernization. Also in defining the criteria to measure political development, Huntington ultimately arrives at the notion of an ’increase in nationality and political participation’.  In contrast, political decay describes how chaos and disorder can arise from social modernization, increasing more rapidly than political and institutional modernization.  Arises in the ‘sclerosis of democratic institutions’.

N.B.  Huntington ranks order over democracy

Q).  How do states move from traditional to modern societies?

Look at Lucien Pye’s five crises of modernization and political development for answers:

1). Identity                 process of nation building

2). Legitimacy            legitimate nature of authority and proper responsibilities of                             government

3). Participation        conflicting demands: when new constituents are included

4). Penetration          autonomy of the bureaucracy over society

5). Distribution          capacity of the bureaucracy

How do we tie in elites?

Key issue is,  who rules?

A). See how Mosca breaks down elites through the ages

1). Property                                       military elite

2). Religious symbols                        religious elite

3). Commerce and wealth                economic elite

4). Advanced countries                    merit elite     

Ties in with Locke and Weber in terms of how elites control society.  Note: ‘Political Formula’ or Mimetism.

B). Maintenance of elites

Elites must hold the support of society or we get a crisis of authority

Maintenance of elites is picked up by Michels through his “Iron Law of Oligarchy:  Closed elites will create competing elites.

Note that Pareto concentrates on the circulation of elites, which brings us back to the idea of continuous change as espoused by the early Greeks Heraclitus and Parmenides. 

Second Stream looks at crisis through power

Hobbes in Leviathan argues for a strong state with the autonomy to govern to avert civil war.

Theme is congruent with Machiavelli who deals with the nature of power by opposing ‘Fortune’ to ‘Virtue’.

Underlying principle is that the ruler must rely on good laws and good arms:  i.e. a strong standing army to maintain power.

Finally look at legitimacy in crisis

Start with Rousseau who identifies breakdown through alienation

Picked up by Marx who looks at the transformation of society through revolutionary stages:

Key to the concept lies in Marx’s idea that technical change will lead to class conflict as social change lags.

Hence we see history evolving through distinct epochs or stages.  For Marx power is equated through economic life and this is a major departure from Weber who views power through political institutions.

Crisis in effect leads to a loss of legitimacy.  Hence there is a breakdown of authority and in a revolutionary period, a loss of power.

All ties back to elites as a loss of authority and power will lead to a rise of a competing elite, which not only assumes power, but changes society in its own image.  See also Theda Skokpol who argues that revolutions occur when revolutionaries exploit peasant frustration with the old regime in a period when the regime has already lost its effectiveness. Note too Ted Gurr’s ideas on ‘relative Deprivation’, and Davies’ ‘J curve’.

In contrast, we can look at effective modern states, where we look for:

1). Social control:       who makes the laws and what are they

2). Compliance:         does the population conform to state demands. 

3). Participation:       State organization of population

4). Legitimacy:           Acceptance of the state’s rules of the game.  Social control                                 as true and right.

POL 5032 WEEK X

Back to the Future: The End of History, trouble in paradise, the price of oil, BRICS and other areas of economic turmoil.

Questions:

 a). Now, 70 years after Bretton Woods, how would you position the United States in terms of your original thoughts on Hegemonic Stability Theory and Ruggie’s Regime Theory.  Where does the United States fit into the international system, both in terms of its power and its financial leadership?

 b).  Given that the arc of uncertainty in the Middle East just seems to grow and grow, will the Middle East still dominate the energy market, or will the world wash its hands in the area and acquire fossil fuels from other potential regions?

 c).  Where in your opinion will the oil price bottom out?

 d). With growth destined to slow within the BRICS, are these nations still the main drivers of the world economy or will we see a new generation of aspirant developers on the world bloc?

 I want to change the focus somewhat in my discussion this week as I feel that the negotiations with Iran on its nuclear programme have now overtaken events.  But before I begin this last week’s blog, may I say that I have thoroughly enjoyed teaching you this year, as our discussions in the seminars have been very interesting and rewarding.  I always say that the more one puts into a seminar, the more the reward and you have certainly demonstrated this axiom with your enthusiastic and often robust debates.  My thanks too must go to Thomas Isbell, who not only speaks with such eloquence when delivering his summaries, but who has also been such a stalwart supporter in my endeavors to make this course memorable. 

 I know I have asked you to assess the position of the United States in terms of Hegemonic Stability Theory, but I wish to change tack and open our discussion for the week with my thoughts on Dame Veronica Wedgwood’s seminal work The Thirty Years War, first published in 1938.  I am also indebted to Dr Henry Kissinger who published his World Order: Reflections on the Character of Nations and the Course of History, in 2014.  Veronica Wedgwood wrote her book in the 1930s when the depression, the Hitler regime in Germany and the Spanish Civil War made the plight of the hungry, the displaced, the persecuted, and the exiled an ever-present concern.  The suffering caused by the Thirty Years Was was beyond all reckoning and as Wedgewood avers, ‘was an unmitigated catastrophe.’ For Kissinger, the war represented the core national interest of France, epitomized by France’s chief minister from 1624 to 1642, Armand-Jean du Plessis, Cardinal de Richelieu.  

 We have to ask ourselves whether the Thirty Years War is relevant today, or whether the Treaty of Westphalia can prove to be a blueprint for peace in the Middle East.? Undoubtedly the clash between Catholics and Protestants in the period that some historians describe as ‘The Age of Reason’, dominated the landscape with its incredible brutality. Over 25 percent of the population in the German states, the Low Countries and the Kingdom of Bohemia succumbed to death, destruction and disease.  And now we see similar barbarity in the Middle East as Sunni and Shiite Muslims tear each other apart.  But there is more than just religion in this mindless pursuit of death and destruction.  Saudi Arabia and Iran are squaring off against each other.  The Kurds are developing the capacity and will to carve out their own national state.  ISIS, with visions of a Caliphate, dominates a large swathe of Syria and Iraq.  Thus just as the war in Bohemia began as a religious war, and then degenerated primarily into a battle over the national state interests of France and Hapsburg Austria, so too will this new general war in the Middle East degenerate into a fight over the national interests of various participants in the region.  We can argue that the Treaty of Westphalia succeeded finally because the combatants on all sides simply fought themselves to a standstill. Will this be the case in the Middle East?

 In this mindless context of war, a dramatic breakthrough occurred as Iran and the P5+1 (the United States, Great Britain, China, Russia, France plus Germany) reached on Thursday April 2nd, a comprehensive framework to curb Tehran’s nuclear programme while gradually easing international sanctions.  Should the outline agreement hold in the coming weeks, it could pave the way for an historic, final, and comprehensive deal between Iran and the world powers before an end-June 2015 deadline.   To my mind this historic agreement, if successful, will be more significant than President Richard Nixon’s visit to China.  

 For starters, in terms of the Iranian economy, billions are up for grabs.  Andrew Torchia, writing in the Khaleej Times argues that Iran’s $420 billion economy will experience up to an 8 percent growth in GDP once Tehran rejoins the global economy.  Iran’s trade with the European Union, which totaled $8.3 billion last year, could balloon 400 percent by mid-2018.  Moreover, Iran could increase oil output by 800,000 barrels per day to a full capacity of 3.6 million barrels per day within three months of the sanctions being fully lifted. No wonder that happy citizens mobbed the Iranian Foreign Minister, Mohammad Javad Zarif, on his return home.

 Consider President Obama’s diplomacy at the moment, by comparing his optimistic speech in Cairo at the start of his presidency with his current policies.  No more fluffy ideas on acceptance.  Obama has become a Realist, and in my opinion, the Foreign Policy of the United States has shifted markedly.  No more of this ‘city on a hill, whose values have universal validity’ stuff.  No more idealism.  No more export of democracy. Obama now has a strategy, which excludes ethics and looks more at order. 

 The Treaty of Westphalia ushered in the notion of nation states acting in their own national interests within an international system governed by anarchy.  Morganthau added a slight twist in that he believed that diplomacy could be useful in mitigating the trend to war.   And here I believe we are seeing the development of the new US Foreign Policy.  The United States has a history of becoming best friends with its foes.  Take Japan, Germany and more recently Vietnam as examples.  Now after 40 years, Iran may ‘Come in from the Cold’ and the obvious new Balance of Power within a Concert of Middle East nations is a bi-polar balance with the United States, Iran, and India ranged against China, Pakistan and Saudi Arabia.  There will of course be revisionist powers skulking in the outlying areas.  Where for example will Russia go?  Will it stay aloof behind its nuclear arsenal?  With Iran sitting on fourth place in the oil reserve stakes along with second place in the gas reserve hierarchy, Russia is in for a beating if a gas pipeline ever gets the green light from Iran to Europe.  And what of the Kurds and their relationship with Turkey?  And who will really defeat ISIS?

 There are always winner and losers.  Within the United States the Republicans are having their usual heart attacks.   Senator Mark Kirk, for example, absurdly declared that ‘Neville Chamberlain got a better deal from Adolf Hitler.’  He was obviously alluding to ‘appeasement’, which next to ‘liberal’ is almost an expletive in Republican Party circles.  And of course the Israeli Prime Minister, Benjamin Netanyahu, now looks even more ineffectual and far from reality with his senseless ranting. 

 Who says international politics is not interesting?

POL 5032 WEEK IX

Power or Money:  How will European trade and investment flow to Russia given Putin’s petulance in the Crimea and the Ukraine?  Are we seeing a major shift in attitudes, or will Merkel kiss and make up?

Questions:

 a). How would you describe the current relationship between the European Union and Russia?

 b). Will Russia continue to dominate Europe’s gas supply, or are we destined to see a new set of supply chains emerging in the future?

 c).  Will EU/Russian relations degenerate into a new Cold War?

 d). Is Russia just too important as a trade and investment partner for Germany, and will there be a new German/Russian rapprochement?

Writing in the November issue of Foreign Affairs, Robert Legvold, refers to ‘Managing the New Cold War’.  There is no ‘Cold War’ taking place.  Rather Russia is returning back to its future by embarking on a ‘New Imperialism’ that has all the hallmarks of a ‘Hot War’.  Indeed, writing his Discussion Paper for the Centre for European Integration Studies, titled Neighbors and other realities: The Atlantic civilization and its enemies, Professor Ludger Kühnhardt argues:

As for the latest outbreak of Russian imperialism, some argue that this chain of events is apt to usher in a new Cold War. That proposition is wrong – for a very obvious reason: The Cold War has never turned violent except for moments of unrest inside the Eastern bloc. That makes it much unlike the series of events which has followed the end of the Soviet Union in 1990: From Chechnya to Transnistria, from South Ossetia to Abkhazia, from Crimea to Donbass, hot warfare by old and new means has taken place. To be sure, the ideological source of today’s set of conflicts is no longer rooted in past totalitarianism. Instead, it lies primarily in the geopolitical objectives of Russia: Eurasian nationalism has become the source of a new zone of blood, instability and uncertainty at the fringes of Russia. Regionalism by coercion – as President Putin tries to implement with his project of the Eurasian Union – will not work either.

 Given Putin’s belligerence, Kühnhardt further argues that Russia’s leadership has returned to its traditional political thinking – imperial, nationalistic, and aggressive. It is not pursuing a transformation toward Western ways, as had been hoped for a while. Instead, it is embracing a new version of ‘reactionary modernism’ (in the words of University of Maryland historian Jeffrey Herf). Such a peculiar form of modernism is something we have already seen under Nazi rule in Germany in the 1930s. In President Putin’s Russia, ‘reactionary modernism’ is coupled with revisionist aspirations to expand Russia’s sphere of influence on the Eastern borders of Europe. From Chechnya to Transnistria, from South Ossetia to Abkhazia, from Crimea to Donbass, hot warfare by old and new means has taken place.

 So in effect, the Ukraine has become the ‘new Germany’ in the fight between East and West.  It has been culturally divided, economically weakened, socially split and is now the new plaything of the ‘Great Powers’.  Like Germany, throughout history, whether during the 30 Years War, or the Cold War, the Ukraine is now the East-West divide, and the clash of political cultures between European Western civilization and Eastern authoritarianism.

 Russia’s economy has shrunk by two percent in the first three months of this year, according to Russian Prime Minister Dmitry Medvedev.  The first contraction since 2009. Losses as a result of Western sanctions have dented income from some foreign exports by $26.7bn, or 1.5 percent of Russia’s GDP, a figure Medvedev argued ‘could increase several times this year’.  Despite the economic hardship, Medvedev argues that Russia will cope, even if economic conditions deteriorate further.  Thus Russia’s leadership is hanging ‘tough’ despite the economic pressure. 

 So the real issue now turns on two questions:

 1). Is the worst of the war over in the Ukraine; or

 2). Is this the lull before a new storm?

 These questions are very difficult to answer. Mikhail Dmitriev, an analyst at ‘New economic Growth’ a Russian think-tank avers that the roots of Putin’s actions in the Ukraine lie in the Kremlin’s need to solidify its legitimacy after growing discontent that erupted into street protests during the winter of 2011/12.  Thus, the trust of Putin’s policy lies both in the domestic and international realms.

 How has Germany responded? Germany’s Foreign Minister, Frank-Walter Steinmeier appears to be taking the lead for Angela Merkel.  Not only is Steinmeier embarking on a new Review of its Foreign Ministry, but also German Foreign Policy.  Speaking on March 16th 2015 at ‘Carnegie Europe’ in Brussels, Steinmeier stressed that German Foreign Policy ‘must be European’. He also stressed that his review of German Foreign Policy had to begin with a simple question, “What if anything, is wrong with German foreign policy?” He answered that Germany had to manage two things at once, “Improving our crisis resilience and strengthening international order.”  He added on the Ukraine crisis, “ Our greatest strength in this crisis has been and continues to be our ability to act jointly.”

 Thus in looking at German/Russian relations, we can argue a number of theoretical points:

 1).  Collective Security is no longer a serious contender to keep the peace between Europe and Russia.  We are fast reverting to the old game of a Balance of Power between two rivals contesting border areas with a cultural divide.

 2).  Security, either through NATO or perhaps new European structures, will increasingly dominate the discourse in Europe as it rebuilds its armed capability. 

 3).  The new weapons of economic sanctions do not seem to be telling on the Russian economy, but this notion could be premature and sanctions may yet bite.

 4). Germany’s citizens are by and large against German involvement in international affairs.  Nevertheless, Germany is, through its Foreign Policy Review, forcing its citizens to change.  How this change takes place, and how Germany pulls the European Union into the street fight with Russia, will largely determine how Europe develops. 

 There is a new reality.  The European region, acting as a regional entity, is fast emerging on the international stage as a Realist player. 

POL 5032 WEEK VIII

The EU/SADC Trade Agreement:  Whither multilateralism? How will regional trade play out within the North/South divide?

Questions:

a). What are the core elements that describe the new EU/SADC Trade Agreement? 

b). Can we discern both continuity and change?

c). Does the EU/SADC Trade Agreement signal the death knell of multilateral trade agreements within the WTO?

d). Does the new EU/SADC Agreement signal a new projection of economic power from the EU?

 Does the European Union’s agreement with SADC signal any change in EU policy?  Or can we argue that the Trade Agreement is merely a continuance of French dominance over EU trade policy as it strives to hold onto past political and imperial glory?  In Christian Salmon’s terms, Does the agreemnt allow the French Right to glorify and resusitate ‘the colonial imagary of France’ against the Lefts ‘economic conquest of the world’?  Is the international stage simply another area where the intellectual fight over the future of the EU is being fought as a proxy war?  I am indebted to Miro Koehler’s input in generating the following arguemnt below.

 Can we use France as a metaphor for European trade poicy today?  To my mind, there is no doubt that in the past the core guiding principle behind France’s Economic Partnership Agreements (EPA) with African, Caribbean and Pacifiic (ACP) countries has been self-interest and this has not changed at all. Also despite its extensive use of a fraternal rhetoric, France’s attempt to extend, maintain and defend its colonial trade patterns throughout the post-WWII era and into the 21st Century has been a major force driving its trade and aid regime. Africa has traditionally been an important supplier of key natural resources for France’s economy, and this still holds today. Uranium supplies from Niger are particularly important for France’s energy security as France  is the second largest nuclear power producer worldwide with 75 per cent of its electricity production dependant on stable uranium supplies. Also France’s former African colonies, still today, represent Paris’ main pré carré, i.e. its main sphere of influence.

 Nevertheless, France’s power in the international system was significantly diminished by WW II, something that was in clear contradiction to the overblown French pretensions of grandeur. Thus Africa’s support has proven strategic in the context of France’s position within the framework of the United Nations (UN) forums and the UN Security Council. Between 15 and 20 African states traditionally vote in favour of France in major UN debates. Accordingly, French development policy has sought to lock in the historical relations with its former colonies, since having an almost exclusive sphere of influence in Africa has been essential to France’s post-WW II aspirations of regaining global significance.  As the French President Francois Mitterrand stated in 1957: “Without Africa, there will be no History of France in the 21st Century.”

 The Lomé Agreement, signed in 1975, was by many considered a unique and extremely development-oriented approach. However, the agreement was arguably less of an altruistic approach than France’s attempt to maintain a tight grip on its colonies, and to extend its sphere of influence to non-francophone Africa. The importance of establishing a credible image of representing Africa’s interest in Brussels did force Paris to grant considerable concessions to Africa under the Lomé Agreement. However, this only occurred to ensure the loyalty and political support of these countries, as it continued to lock in African trade patterns.  In Brussels, the Lomé convention was perceived as a set of trade and aid concessions, which had to be granted to the ACP group in order to secure energy supplies from Africa; a concern which had arisen from the OPEC oil crisis in the early 1970s.

 The fall of the Berlin Wall did change French, and by implication European trade policy. Now France is more than happy to include the former Cold-War trouble spots, such as Namibia, Mozambique or Angola. In the absence of the Cold War competition for ideological alignment, the need to buy African loyalty is even more important.  Thus, France and the EU increasingly promoted the idea of locking in Afro-European trade through WTO compliant regional integration.

 The expiry of the Lome IV convention provided the opportunity to adapt to the new challenges of the 21st  Century by restructuring Afro-European trade under the Cotonou Agreement. The Lome Agreement had come under heavy criticism by the WTO due to the discriminatory nature of the agreement. Non-reciprocal trade violated GATT Article XXIV and thus, in order to comply with WTO regulations and show its commitment to fair and non-discriminatory trade, the EU’s future agreements with the ACP group had to be of a reciprocal nature.

 The EU, however, has never really been forced to adapt a reciprocity-based, and thus WTO-compliant, cooperation agreement with Africa. Neither Lome nor Cotonou were ever officially challenged by the WTO and Europe has fought heavily for the maintenance of other WTO-violating agreements, such as those regulating the import of bananas, sugar, beef and rum. Since in addition, the EU member states have considerable influence on WTO regulations, WTO compliance should rather be seen as a convenient legitimization of the EU’s approach of returning to pre-Lome trade liberalization. The Cotonou Agreement was thus based on a rhetoric emphasizing Afro-European partnership in the fight against poverty, to be achieved through deeper regional integration between the two regions. However, the EU’s promotion of such a trade model was not really aligned to the official objective of poverty alleviation, but more at securing for itself continued market access and privileged economic status in the continent’s emerging markets. The EU’s aid for trade approach, which saw the mobilization of considerable amounts of EU aid to address trade-related constraints in Africa’s economies, must thus be seen as a counter strategy with respect to China’s increasing aid for export-facilitating investments in infrastructure.  With China in mind, and in order to secure its economic relations with Africa, the EU incorporated into the Cotonou Agreement an arrangement providing for the expiration of non-reciprocal trade preferences. These Economic Partnership Agreements (EPAs) divided the ACP group into several economic blocs forming a variety of regional integration agreements. The EPAs comply with WTO regulations yet are still able to offer African countries preferential treatment, and must be understood as a renewed attempt to lock in historical preferential trade relations with African resource suppliers.

Today, Europe’s trade and aid regime is still characterized by self-interest, particularly in the sense that it uses trade and aid as a foreign policy tool in order to increase its structural power and play a more important role in the international arena.  In essence, France has managed to keep alive Europe’s trade agreements with Africa to allow it preferential access to African raw materials, regardless of the changes in the international environment.  The question we have to answer then, is whether the European Union is not painting the EU/SADC Agreement with the same old brush?

POL 5032WEEK VII

Interpreting European Law and the Regional State: Are Calhoun, Clay and Webster relevant today?

Questions:

a). Will judicial power remain at the nation-state level, or will the European Union merge into a federal institution?

 b).  Can we compare the early debates within the United States on federalism with current judicial debates within the European Union?

 c).  How does the ECJ compare to the US Supreme Court?

 As evidenced by the Maastricht Treaty and Lisbon Treaty preambles, Europe seeks to “create” and “to continue the process of creating an even closer union among the peoples of Europe.”  In effect, these preambles seek to form a federation similar to that of the United States, by attempting to further consolidate and centralize power.  In contrast many of the member States of the European Union have shown resistance through their national and constitutional courts, ‘to this ever closer union,’ as they wish to remain within a looser system of allied nation states.  Thus we have to view the European Union, regardless of the rhetoric, as a regional entity that is pulling in two directions. 

 On the one hand we have the European Court of Justice (ECJ), which has transformed itself from a weak institution with little enforcement capabilities, into one of the strongest political actors in Europe and the leading proponent of European integration today. The ECJ has decided on a series of cases that have closely followed the foundational cases decided by Justice Marshall and the US Supreme Court.  Like the US Supreme Court, the ECJ has attempted to federalize the European Union by not only asserting the supremacy of community law, but also by granting individual citizens and lower courts the right to bypass their respective higher national and constitutional courts.

 In fact the ECJ’s history can be categorized into three periods.  The first encompassed its formation through the landmark cases of the 1960s, including the Van Gend en Loos and Costa cases and lasted until the early 1970s.  Although many foundational cases were decided in this period, the ECJ remained a weak institution as few took notice of the potential ramifications of these decisions.

 The second period continued until the 1980s.  During this period, the ECJ continued to expand on its foundational cases, and we can recognize that together the first and second periods represented the ECJ’s transformation into a political actor. To do so, the ECJ used a well-known judicial practice of expanding its jurisdictional authority by establishing legal principles to cases under its consideration. 

 The third and final period started in the 1980s and continues to the present day.  During this period, the ECJ’s area of control gradually expanded through treaty amendments including the Single European Act of 1986, the 1992 Maastricht Treaty, the 1997 Amsterdam Treaty, the 2001 Treaty of Nice, and the 2007 Treaty of Lisbon. 

 National courts throughout the member States have had varied responses to the ECJ’s efforts.  But most notable are Germany and Italy, which have consistently questioned the democratic legitimacy of the Union, making the issue both legal and political.  As the ECJ has been the most powerful force for integration, the courts in the member States have evidenced the most opposition. Some of the national court responses have mirrored the same arguments made by John C. Calhoun on nullification; in a word, the EU remains a group of aligned, but ultimately sovereign member States, and a State can nullify an act of the general government if deemed unconstitutional.

 Thus in order to understand the judicial fight in the EU more fully, we must return to the arguments and debates that raged within the United States during the early part of the 19th Century, especially the lessons learned from the pre-Civil War state-rights advocates, and particularly those of John C. Calhoun.

Calhoun’s understanding of federalism provides an alternative vision to the possibilities of federal organizations for emerging supra-national unions.  His arguments, and indeed his entire intellectual attack still resonates against the formation of large pluralistic super-unions that are based on the federal ideal as evidenced by the Maastricht Treaty and Lisbon Treaty preambles.

 Larry Backer’s excellent article titled “The extra-National State: American Confederation Federalism and the European Union,” Columbia Journal of European Law 7, (2001) provides the point of departure, but to understand where the European institutions are heading, we also need to understand how Chief Justice John Marshall revolutionized the relationship between Congress and the judiciary, first through his concept of judicial review, and second through his ruling on federal judicial power.  Indeed his actions irrevocably changed the nature of power between the American States and the federal authority. 

 Can the ECJ follow Marshall?  If not then State sovereignty is the issue that prevents the European Union from becoming a ‘United states of Europe’ and makes a mockery of the ‘functionalist’ argument.  As long as the national courts stick to Calhoun’s playbook, ultimate authority will remain with the member States.